Chapter 07 Consumer Behavior Multiple Choice Questions 1. Utility: A. is synonymous with usefulness. B. is want-satisfying power. C. is easy to quantify. D. rarely varies from person to person. 2. Marginal utility can be: A. positive‚ but not negative. B. positive or negative‚ but not zero. C. positive‚ negative‚ or zero. D. decreasing‚ but not negative. 4. The ability of a good or service to satisfy wants is called: A. utility maximization. B. opportunity cost
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unemployed workers to the size of the labour force: 1‚000‚000 / 23‚000‚000 = 4.3 %. 4. a) The poor who are at minimum subsistence and who aspire to middle class consumption patterns: This group values income highly relative to leisure‚ so the indifference curve is relatively flat. As the wage increases‚ the income constraint line rotates clockwise‚ and we would expect a relatively large increase in hours worked. This response is dominated by a substitution effect‚ but there may be a small income
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ITS OPPOSITE EVOLUTIONARY ALTERNATIVE by Valentino Piana (2003) From http://www.economicswebinstitute.org/essays/consumertheory.htm The standard textbook model of consumer is an outstanding example of the neoclassical paradigm in economics [1]: a h y p e r-rational agent maximises something by choosing an "optimal" bundle of things. Here‚ the hyper-rational consumer maximises utility (i. e. an overall generic measure of well-being) by exhausting a given budget. He has a pre-defined
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units of X for 1 unit of Y. c. What is the marginal rate of substitution? X = 2‚ Y = 8 X = 4‚ Y = 2 ∆Y∆X=MRS -( 8-2 )( 2-4 )= - 62=3 8 6 4 2 1 2 3 4 5 Question 7: Suppose a customer has indifference map shown below. The relevant budget line is LZ. The price of Y is $10. 60 50 L 40 B 30 20 10 A M 0 10 20 30 40 50 60 70 80 a. What is the consumer’s income? Quantity Y = 50
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University of Lethbridge Econ 3030Y – Managerial Economics PRACTICE MIDTERM EXAMINATION Fall 2012 Marks: 80 Time: 2 hours The examination is out of 80 marks. You have 2 hours to complete it – please note the value of each section and plan your work accordingly. This is your opportunity to demonstrate your knowledge and understanding of the material. A premium will be placed on the clarity of the exposition. Question 1 (10 marks) Copy the following table in your examination booklet‚ complete
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21 : Theory of Cost 1 Recap from last Session Production cost Types of Cost: Accounting/Economic Analysis Cost –Output Relationship Short run cost Analysis Prof. Trupti Mishra‚ School of Management‚ IIT Bombay Session Outline The Long-Run Cost-Output Relations Break-Even Analysis: Linear Cost and Revenue Functions. Break-Even Analysis: Non-Linear Cost and Revenue Function Prof. Trupti Mishra‚ School of Management‚ IIT Bombay long-run is a period for which all inputs
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graph some of his indifference curves. The consumer will choose the “best” indifference curve that he can reach given his budget. But when you try to do this‚ you have to ask yourself‚ “How do I find the most desirable indifference curve that the consumer can reach?” The answer to this question is “look in the likely places.” Where are the likely places? As your textbook tells you‚ there are three kinds of likely places. These are: (i) a tangency between an indifference curve and the budget line;
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Definitions a diagram devised by F. Y. Edgeworth‚ in the form of a box which plots the indifference curves of two individuals or firms relative to the consumption or production of two goods. The contract curve plotted shows the points where the utility to the two individuals or firms is equal. analytical tool for determining the contract curve used in welfare economics. It is caused by the combination of the indifference curve systems of two exchange partners For this‚ the two systems must be arranged so
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CONSUMER CHOICE 5.0: Introduction In this unit‚ we shall concentrates on a consumer by looking at the behaviour of a consumer in exclusion from both other consumers and producers. Recall that a consumer is one who uses goods and services to satisfy her wants. She is assumed to be rational meaning that he aims at utility maximization; given her income and commodity prices. There are several theories that have been developed to try and explain the behaviour of a consumer. However‚ they can be
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Chapter 02 - Economists’ View Of Behavior CHAPTER 2 REVIEW QUESTIONS 2–1. Which costs are pertinent to economic decision making? Which costs are not relevant? The marginal (incremental) costs and benefits are pertinent to economic decision making. Sunk costs and benefits are not relevant. In economics‚ “bygones are forever bygones.” 2-3. The Solace Company has an inventory of steel that it originally purchased for $20‚000. It currently has an offer to sell the steel for $30‚000. Should
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